Manufacturing recovery stumbles as factory orders fall again

Tiffany Hsu

There’s been quite a bit of chatter this spring about a rebound in the manufacturing sector. Whether those predictions will hold up is looking less and less certain as new orders tumble.

Demand for factory-made goods has fallen three of the past four months, sliding an unexpected 0.6%, or $2.9 billion, in April. The measure had tanked 2.1% in March, marking the first back-to-back declines in more than three years.

Machinery orders plunged 2.9%; requests for cars, computers and electrical equipment also fell, according to the Commerce Department. Demand for non-durable goods – items designed to last less than three years – dipped 1.1%. Shipments are down for the fourth month in a row; unfilled orders and inventories rose.

“It’s always going to be a bit touch-and-go when we’re talking about the global economic recovery,” said Bob McCutcheon, U.S. Industrial Products leader for PwC. “Europe, China, those could have a short-term effect on growth at any given time.”

In recent years, the sector has “seen a relatively strong spring only to follow up with a slowdown,” he said.

“But long term, we are starting to see positive signs of a resurgence in domestic manufacturing,” he added.

This year, the dip may be related to a reduced government tax credit that boosted business investment in the U.S. last year, said Esmael Adibi, director of the A. Gary Anderson Center for Economic Research at Chapman University. Exports are also growing at a slower pace, he said.

But, like McCutcheon, he also doesn’t think the manufacturing declines of the past two months are a trend.

“Everything is relative,” Adibi said. “I still believe the numbers are going to be positive.”